by Insignis Cash Solutions in Industry Perspective
- More than £700 billion of cash languishing in accounts with uncompetitive rates
- An improvement of just 1% on these returns would generate £7 billion for UK savers
- Inertia means savers are missing out on free money
- Savers should make 2018 the year they take action to generate better returns on their cash
- This can now be achieved without having to open and maintain multiple bank accounts
Giles Hutson, CEO of Insignis Cash Solutions, explains how active cash management can create a much needed boost for UK savers and the economy:
“UK individual savers currently hold over £700 billion of cash that isn’t being put to use – languishing in low interest accounts with uncompetitive rates. An improvement of even just 1% on these returns would release £7 billion back to these savers and result in a significant boost to the UK economy.
“The traditional, convoluted process of pursuing competitive returns on cash makes it extremely tedious and time consuming. It requires constant monitoring, with products being launched and withdrawn every day, and as a result, savers simply don’t have the motivation to seek out higher returns on their deposits.
“With our free time increasingly eroded by the demands and distractions of modern society, people feel they don’t have time to prioritise their cash savings. We need to rethink how cash is viewed; the current inertia means savers and the UK at large is missing out on free money.
“If attitudes to cash can be turned around, savers can accumulate meaningful returns on their deposits that stack up favourably against other asset classes. For example, two year UK Government bonds currently yield 0.53% while the highest two year bank account yields 2%.
“Savers can’t bank on further rate rises alone to save the day – they need to take decisive action now. The Office for Budget Responsibility (OBR), has recently downgraded its economic growth forecast for the UK to only 1.5% in 2017, and a progressive decline to 1.3% in 2020. This reinforces the risk that, despite the welcome rate rise by the Bank of England in November, we are in a persistent low interest rate environment and this is concerning for savers as inflation eats into their hard earned cash savings.
“Progress is being made across the UK retail banking industry. New players are driving more competitive rates and Open Banking will be a catalyst for greater transparency, encouraging a stronger culture of account switching. Insignis provides a platform which means shopping around no longer needs to be a headache. Savers can work with one company to access multiple banks. People can now take control efficiently and make 2018 the year they take steps to generate better returns on their cash.
“Through a more active approach to cash management, savers can start to fight back – improving cash deposit interest rates, increasing personal spending power and collectively benefitting an uncertain economy.”